Post by planetgroove » Wed Nov 30, 2011 12:04 am

Hi,

does anybody know how to apply tax/VAT to vouchers?
Because without VAT on vouchers (like on every other product), they could not be used here in Germany.

thanks,

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Post by uksitebuilder » Wed Nov 30, 2011 3:55 am

vouchers are not products, they are a cash alternative.

when the voucher is redeemed, vat is accountable on the sale at that time.

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Post by SXGuy » Wed Nov 30, 2011 7:18 pm

so what uksitebuilder is basically saying, that you charge vat on the product, not the voucher, voucher is like cash, it reduces the overall price to pay on the product/s

:)

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Post by planetgroove » Thu Dec 01, 2011 8:11 pm

SXGuy wrote:voucher is like cash, it reduces the overall price to pay on the product/s
And because of this, it has to be taxed before. Because you sell a virtual "product" which has the name voucher. You get the money for this - so it has to be taxed like everything else.
This bought (and taxed) product is then used to reduce a price for another customer (and so he pays reduced tax on the product also). Hence it is necessary to tax the voucher-customer before. Otherwise you could get into serious problems with the fiscal authorities. At the end the complete price has to be taxed, regardless who paid for it.

So: How to do this? That is the question.

(If you don't want to tax your vouchers: OK, but please do it on your own risk!)

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Post by grgr » Thu Dec 01, 2011 8:56 pm

No, for the UK it is the following, can't vouch for other countries but it's probably the same:
Face value vouchers have a monetary face value. These are used instead of money for a future purchase. If you sell them at or below their monetary value, no VAT is due.

When a customer redeems a face value voucher, the transaction is treated as though the face value voucher was cash, and VAT is due on the full value of the transaction. If you can show the voucher had been sold at a discounted amount, VAT is due on the discounted value, rather than the face value of the voucher.

If you give away face value vouchers and redeem them for no further payment, the goods purchased are usually treated as if they were free gifts for VAT purposes.
Open cart handles this perfectly well, you must make sure you have your order totals in the correct sequunce though. The gift voucher should be just before the total, that way the VAT on the full amount of the goods is calculated and invoiced, but the total amount the customer pays is reduced by the voucher.

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Post by Johnathan » Thu Dec 01, 2011 9:46 pm

planetgroove wrote:And because of this, it has to be taxed before. Because you sell a virtual "product" which has the name voucher. You get the money for this - so it has to be taxed like everything else.
This bought (and taxed) product is then used to reduce a price for another customer (and so he pays reduced tax on the product also). Hence it is necessary to tax the voucher-customer before. Otherwise you could get into serious problems with the fiscal authorities. At the end the complete price has to be taxed, regardless who paid for it.
This seems like it would be illegal to me in most countries. Wouldn't you be double-charging tax for the same amount of money?

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Post by planetgroove » Thu Dec 01, 2011 11:41 pm

Johnathan wrote: This seems like it would be illegal to me in most countries. Wouldn't you be double-charging tax for the same amount of money?
You wouldn't, because you'd get the complete amount of money the product orginally costs, including the right proportion of VAT - only from two different people (--> original price including VAT reduced by the vouchers amount including proportional VAT = reduced total for the voucher-receiver).
grgr wrote: Open cart handles this perfectly well, you must make sure you have your order totals in the correct sequunce though. The gift voucher should be just before the total, that way the VAT on the full amount of the goods is calculated and invoiced, but the total amount the customer pays is reduced by the voucher.
What would you do, if - at the end - the voucher will never be redeemed for any reason? You'll end up with a VAT-less revenue (exactly: the voucher's amount of money that you received). I don't know every legal basics from everywhere in the world, but I strongly assume that it is illegal by all means, if you don't charge AND pay VAT for money obtained that way. So better be safe than sorry. I'd say: everything would be easier if you could charge VAT directly on time with the vouchers sale.

Bottom line:
Why discuss this point, instead of simply leaving it up to the shop-owner, to charge VAT on vouchers or not?

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Post by SXGuy » Fri Dec 02, 2011 12:10 am

because leaving it up to the shop owner to decide whether to charge vat on vouchers or not, is a) unresponsible b) could be illegal in his country and c) would be charged more than nessersary on vat payable to the authorities.

dont believe for 1 second, vat collection agencies care if you over pay them, but overpaymet is the biggest contributor to a reduction in net profit.

if the voucher does not carry a charge for vat, then the seller has not lossed or gained anything by excluding vat on the sale of that voucher. infact, by not charging vat on the voucher the seller has actually reduced the vat payable to the authorities at that time until it is redeemed.

when the voucher is redeemed its redeemed as though its physical cash, so if its used to buy an item that has vat applied, you have still received full payment, but you must pay the vat on that item, the same way you would with any other.

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Post by planetgroove » Fri Dec 02, 2011 12:54 am

SXGuy wrote:because leaving it up to the shop owner to decide whether to charge vat on vouchers or not, is a) unresponsible b) could be illegal in his country and c) would be charged more than nessersary on vat payable to the authorities.
All the same could be said about not giving him the chance to choose, but being forced to use the one OR the other method. I'm no tax accountant, but all I have read about this topic in various German forums is, that accounting vouchers correctly is not really simple. It is dependent on the different forms, a business can be run bookkeeping-wise in Germany - which need different approaches. Hence my question, whether there is a possibility to choose, if the circumstances maybe force you eventually.
infact, by not charging vat on the voucher the seller has actually reduced the vat payable to the authorities at that time until it is redeemed.
On the other hand: If he shortens the VAT illegally and does not pay where he should, it could lead to severe penalty.
when the voucher is redeemed its redeemed as though its physical cash, so if its used to buy an item that has vat applied, you have still received full payment, but you must pay the vat on that item, the same way you would with any other
I'll check it again and see how the checkout handles the deduction in detail. If it charges the full VAT on the original product price at that point, regardless of the deduction, it may only leave the need to account those different movements correctly, especially regarding the VAT-reports to the authorities.

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Post by grgr » Fri Dec 02, 2011 1:05 am

planetgroove wrote:
What would you do, if - at the end - the voucher will never be redeemed for any reason? You'll end up with a VAT-less revenue (exactly: the voucher's amount of money that you received). I don't know every legal basics from everywhere in the world, but I strongly assume that it is illegal by all means, if you don't charge AND pay VAT for money obtained that way.
Completely irrelevant, certainly in the UK, don't know about germany. All you are doing essentially is exchaning cash for cash. No product or service was sold. This is basically only true where the same retailer is selling and redeeming the voucher and only if the voucher is for the same amount or less.

If someone does not redeem a voucher then all the have done, in essence, is give you some cash.

The quote from my earlier post was from HMRC who in the UK are responsible for VAT. http://www.hmrc.gov.uk/vat/managing/cha ... -etc.htm#4

Bear in mind that all we are talking about here is the Gift Voucher - not any other form of offer or voucher for which the rules can start to get complicated.

I suggest that you contact the authority in Germany that deals with your VAT to get the answer. Opencart has its roots in the UK so is most suited to UK purchases, it maybe that some modification is required to account for different rules in different countries.

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Post by planetgroove » Fri Dec 02, 2011 1:11 am

grgr wrote:Opencart has its roots in the UK so is most suited to UK purchases, it maybe that some modification is required to account for different rules in different countries.
That was why I was asking, if it is possible to change the VAT-behaviour on vouchers somehow (I meant gift-vouchers)...
:D

Please see my last post before. I'll check everything again.
My question was "just in case".
:-X

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Post by SXGuy » Fri Dec 02, 2011 2:54 am

just in case, then yes i think so, change the order totals sort order so vouchers are before subtotal, and i think in theory it will add vat to that also.

Try it and see.

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Post by planetgroove » Fri Dec 02, 2011 9:22 pm

SXGuy wrote:just in case, then yes i think so, change the order totals sort order so vouchers are before subtotal, and i think in theory it will add vat to that also.
Hhmm. The problem then could be, that the amount of vat is not shown on the voucher-page itself, as it is for all other products, if this method is selected.

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Post by SXGuy » Sat Dec 03, 2011 3:46 am

well, first, i think you need to find out if you have to include vat to vouchers for your country, and then if you do, someone may help to find a solution, but until then it seems abit pontless in speculating what if's.

Personally, i think you will find, vat is not required to be applied to vouchers, and sale of those vouchers are recorded as zero or exempt of vat. in which case, the argument for how to apply vat with opencart is not valid.

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Post by planetgroove » Mon Dec 05, 2011 6:29 pm

Arguing about valid arguments on that topic is more or less the pointless thing, when the question was a technical one.
Simply answering, that opencart is not able to apply VAT on vouchers (like the way it does on other products) would have been sufficient. Or offering a solution, or tips. Everything else seems to be mere speculation, if you are no tax accountant (here in Germany). Here in Germany there are a lot of online shops that sell gift vouchers - WITH vat on them. Just try a search on the words "Geschenkgutschein" and "mwst" and you'll see for yourself. Maybe they all are wrong, who knows? That said, thank you for the hints and let's call it a day.

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Post by OpenQuestion » Sun Sep 04, 2022 10:49 pm

planetgroove is completely right and I am also trying to find a fix for this. If Customer A buys a voucher for, say, €25 and gifts it to Person B, Customer A is liable to VAT as he is purchasing a service from my website. This is the receipt I will show my accountant as it reflects the time the money comes into my account. So in Ireland, a voucher of €25 is equivalent to €20.33+ 23% VAT = €25 if Customer A is located in my country. This should be shown on the receipt given to Customer A who buys the voucher. The voucher sent to the gifted person should say €25 (incl. 23% of VAT) to be precise.
The person who receives the gift voucher then knows that he/she can purchase the amount of €20.33+ 23% VAT = €25 and thus does not feel tricked by the shop owner during checkout. This is my opinion.

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Post by Eagleapk » Tue Sep 27, 2022 6:26 am

Completely irrelevant, certainly in the UK, don't know about germany. All you are doing essentially is exchaning cash for cash. No product or service was sold. This is basically only true where the same retailer is selling and redeeming the voucher and only if the voucher is for the same amount or less. i recommend you to use uk online vat calculator. there are many on the internet you can easily found it.

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Post by ADD Creative » Tue Sep 27, 2022 5:57 pm

Eagleapk wrote:
Tue Sep 27, 2022 6:26 am
Completely irrelevant, certainly in the UK, don't know about germany. All you are doing essentially is exchaning cash for cash. No product or service was sold. This is basically only true where the same retailer is selling and redeeming the voucher and only if the voucher is for the same amount or less. i recommend you to use uk online vat calculator there are many on the internet you can easily found it.
That is not the always the case in the UK. It depends on whether the voucher is a single or multi purpose voucher. If the voucher can only be used to for one type of product that all have the same VAT rate, then the VAT must be accounted for at the time of issue.

https://www.gov.uk/guidance/business-pr ... -voucher-1

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